Despite a host of advantages, including dramatically lower wage rates, a much-prized right to work law and "friendlier people," Virginia is considered no better than Maryland as a state in which to do business, according to a new nationwide survey of executives at 750 major corporations.
The survey has jolted state economic development officials here who fear their once-wide lead over their northern neighbor has slipped away due to a changing economic environment and an aggressive Maryland promotional campaign.
"It was definitely a surprise," said Hugh D. Keogh, deputy director of Virginia's Division of Industrial Development, whose agency paid $30,000 for the survey. "In the 1970s, Virginia had a model economic development program. Now our competitive position has slipped. . . . We've fallen into the middle of the pack in a very competitive Southeast region."
The survey identified 29 factors that were important to corporate decision-makers in deciding where to relocate, such as proximity to key services, availability of skilled workers and the personal preference of company executives. But Keogh offers one simple explanation for the state's unexpectedly poor showing--advertising.
In the past four years, Maryland has increased its promotional and advertising budget eight-fold (from $250,000 to $2 million) and launched slick, polished color ads that run in national publications such as Business Week aimed at luring out of state business executives.
Virginia, by comparison, is spending only $510,000 this year for business advertising. The Robb administration, however, worried about the state's fading image in the business community, will increase that to $887,000 next year as part of a new effort to overtake Maryland.
"If you look at their Maryland's ads, they're basically nebulous--they're very bland, image oriented ads," said Keogh. He cited, as an example, Maryland's "carrot" ads, showing a life-size carrot, accompanied by the slogan "Come for the carrot. You'll stay for the greens."
"I'm not sure what that means, but it's obviously been able to evoke a positive impression," said Keogh.
In Annapolis, John Griffin, an aide to Gov. Harry R. Hughes who works on economic development, said he wasn't surprised at all by the Virginia survey's findings, although he was reluctant to respond to Keogh's criticism of Maryland's ads. "I don't want to comment on that, other than to say we've won awards for some of the gimmicky ads we've used--and I don't mean that in a pejorative sense," said Griffin.
As for the state's sharply increased spending for business advertising--a point that Hughes boasted about in last fall's reelection campaign--"businesses don't know you're interested in them and what you have to offer unless you publicize it," said Griffin.
The superiority of Maryland's economic development and advertising efforts over Virginia's was suggested by the study in which corporate decisionmakers were asked dozens of detailed questions about the factors they used in deciding where to relocate and how they ranked five eastern states, including Virginia and Maryland, in various categories. Overall, Virginia ranked below North Carolina, even with Maryland and above South Carolina and Tennessee.
"Although Virginia was rarely mentioned on an unaided basis as a site considered for a company move, most executives said they would consider Virginia when asked the question directly," concluded the survey, which was conducted by Dominion Research Corp. of Baltimore.
"Recall of Virginia's advertising was lower than that of other states in the region," it states. "The high recall of Maryland's aggressive campaign probably was a factor in Maryland's high ratings overall."
The survey's results were probably most painful to Virginia officials who have long boasted about its favorable political climate for business, as reflected in a right-to-work law and lower wage rates. Wages are, to be sure, still lower in the Old Dominion (average hourly earnings in manufacturing jobs were $6.33 in Virginia and $8.10 in Maryland, according to 1981 data) and the right-to-work law--the bane of the state's anemic labor unions--still stands.
But, says Keogh, these are less significant in today's "evolving technogical age" in which the state finds itself competing mostly for non-unionized high-tech, computer and service-oriented industries rather than the blue-collar, smokestack industries of the past.
As a sign of the changing times, the state last summer phased out an old promotional campaign that, in one controversial ad, highlighted right-to-work. It showed a grinning worker, sporting a denim work apron and safety glasses, leaning his right arm on a drill press.
"Virginia Is Not Only a Right-to-Work State," read the message below the photo. "It's a Want-to-Work State."
The old ads will soon be replaced by a new campaign, devised by the state's advertising agency, Siddall, Matus & Coughter Inc. of Richmond, which will emphasize the state government's avidly pro-businss philosophy in a broader sense, says Keogh. They will make the point that "we have a political philosophy that doesn't change from one party to the next . . . we couch it in terms of predictability."
The ads are not yet ready to be unveiled publicly, but one advantage they apparently won't rely too heavily on is "the friendliness factor." The survey found that Virginia was rated number one in "friendliness of the people," a ranking that was pleasing but not terribly useful.